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Morning Briefing for pub, restaurant and food wervice operators

Fri 21st Jul 2017 - Update: Pubs Code figures, trade bodies' wage warning
PCA – Pubs Code will ‘come into its own in second year’, updated figures to be published on Wednesday: Pubs Code Adjudicator (PCA) Paul Newby has said he is convinced the Pubs Code will come into its own in its second year of operation as he prepares to publish updated figures on arbitration cases. The new statistics, which will be published on Wednesday (26 July), will include information on the number of enquiries received by the PCA Enquiry Line during the past year and the number of cases referred to the PCA for arbitration. For the first time it will also indicate the proportion of referrals that relate to each of the six pub-owning businesses – Admiral Taverns, Ei Group, Greene King, Marston’s, Punch, and Heineken-owned Star Pubs & Bars. Newby revealed the details as he published his first annual report. At the end of March, there were 130 cases under consideration – 12 of those cases had been ongoing for more than six months while the majority (79) had been considered for between three and six months. There had been 25 awards made in the first nine months of operation, with 11 of those in relation to the Market Rent Only (MRO) option. The total number of cases accepted by the PCA for arbitration in relation to the offer of an MRO option during the period was 104. The report showed the PCA raised a total levy of £1.5m in 2016/17. The pub-owning businesses were required to pay shares of the total levy ranging between 7% (£105,000) and 40% (£594,000) based on the proportion of tied pubs covered by the code owned by each. HM Treasury rules do not permit the PCA to retain surplus levy payments from one financial year to the next – spent levy in 2016/17 amounted to £692,627 – and the PCA will return this in the same proportions in which it was paid to the pub-owning businesses by offsetting the amount against their levy payment for 2017/18. The PCA received a total of £34,150 in fees income during 2016/17. Of this, £27,300 consisted of fees paid by tied pub tenants to refer their case to the PCA for arbitration and £6,850 was recouped from pub-owning businesses. During the period, Newby received total remuneration of between £160,000 and £165,000, consisting of £115,000 to £120,000 in salary and £46,000 in pension benefits. Newby said: “Over the past 12 months interest in the code has been high and I am pleased that tenants have been exercising their rights. I know there are concerns within the tenant community about the way the code has operated and some frustration over the time arbitrations can take to resolve. But the PCA must deal with all cases in an impartial and lawful manner. To do otherwise would simply increase the risk of legal challenge, with the inevitable consequence of greater delay and cost. But as that new law beds in, cases are completed, and key issues determined, I am confident I will be able to report further progress in the coming year. Year two of the code will be another busy year, but I am convinced it will also be when the Pubs Code comes into its own and demonstrates the tangible benefits and real options it gives to tied tenants.”

Trade bodies unite to issue wage warning: Trade bodies have highlighted increasing costs that threaten to undermine further investment in the sector. The Association of Licensed Multiple Retailers (ALMR), the British Beer & Pub Association (BBPA) and the British Hospitality Association (BHA) urged the Low Pay Commission (LPC) to weight factors such as a rise in beer duty, auto-enrolment pensions, and the Apprenticeship Levy carefully when setting future minimum wage rates. ALMR chief executive Kate Nicholls said: “The eating and drinking out sector has been characterised by record job creation since 2010, with employment up 18%. However, that has slowed markedly over the past year to 18 months, partly as a result of economic and currency pressure but largely due to increased regulatory costs, such as business rates, which are in danger of becoming unsustainable in the current trading environment. The 2017 ALMR Christie & Co Benchmarking Report shows a drop in growth from 3.4% to 1.1% across the entire sector. At the same time, wage costs have jumped by 12% and gross wage costs as a proportion of turnover now stand at 28%. The sector is approaching tipping point. Many businesses do not have a cushion against significant increases and the LPC must understand that large increases in wage rates will threaten future employment and investment.” BBPA chief executive Brigid Simmonds said: “The National Living Wage cost the industry about £34m in 2016, with the increase to £7.50 this year adding a further £52m – an average of £1,600 for every pub. We also face significant costs in other areas, such as a 4% rise in beer duty in the Budget, auto-enrolment pensions, business rates and the Apprenticeship Levy. The LPC needs to weight all these factors carefully when setting rates.” BHA chief executive Ufi Ibrahim said: “The BHA has urged the commission to be cautious in setting rates for the National Minimum Wage from April 2018. As there is only one compulsory rate for all regions of the UK, particular attention must be paid to those struggling economically. It is important the industry’s growth – especially in employment – is maintained through a responsible settlement.”

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